The step-down method allocates support department costs to only operating departments in a sequential manner.

The direct method is conceptually the most precise method because it considers the mutual services provided among all support departments.

Two or more support departments whose costs are being allocated can also provide support to each other and as well as to operating departments.

The cost-allocation method that allocates each support-department's costs to operating departments only is the direct method.

The step-down method can provide relevant information for outsourcing decisions.

One version of the reciprocal method of cost allocation uses a sequence that begins with allocating the costs of the support department that renders the lowest amount of services to support departments and ends with the allocation of costs of the department that renders the highest dollar amount of services to other support departments.